The mechanisms of hepatic carcinogenesis remain a major focus of research. Progress has been made in the identification of genetic changes occurring in premalignant liver, with evidence that dysplastic liver is neoplastic. Significantly, oncogenic changes are also present in cirrhotic liver. With respect to metabolic pathways relevant to hepatocellular carcinoma, there is increasing emphasis on the balance between the proliferative effects of insulinlike growth factors and the antineoplastic effects of transforming growth factor-β. These and other studies are elucidating the histologic, genetic, and related metabolic steps that are relevant to malignant transformation. Clinically, dysplasia present on liver biopsy has been used to identify patients at increased risk of developing hepatocellular carcinoma. This predictive testing has implications for the treatment of patients with compensated cirrhosis. Additionally, there is tantalizing and controversial evidence that treatment of hepatitis C-related cirrhosis with interferon may reduce the risk of hepatocellular carcinoma.